First annexation proceedings began when U.S. President Benjamin Harrison stepped down and Grover Cleveland took office. Cleveland was an anti-imperialist and was strongly against annexation. He withdrew the annexation treaty from consideration, mounted an inquiry and recommended the restoration of Liliʻuokalani. Further investigation by Congress led to the Morgan Report, which established that the actions of U.S. troops were completely neutral, and exonerated the U.S. from any accusations of complicity with the overthrow.

On August 12, 1898, the flag of the Kingdom of Hawaii over ʻIolani Palace was lowered to raise the United States flag to signify annexation.

The provisional government convened a constitutional convention in Honolulu to establish the Republic of Hawaii. Thurston was urged to become the nation's first president but he was worried his brazen personality would damage the cause of annexation. The more conservative former Supreme Court Justice and friend of Queen Liliʻuokalani, Sanford B. Dole, was elected the first and only president of the new regime.

Cartoon depiction of the United States, its territories, and US controlled regions as a classroom with belligerent Philippines, Hawaii, Puerto Rico, and Cuba

When Grover Cleveland's presidency ended in March 1897, former American Civil War soldier William McKinley took office. McKinley believed in increasing American prominence on the international stage.

Under McKinley's policies, Americans were sent to fight against Spain in Cuba, the Philippines, and Puerto Rico in the Spanish-American War of 1898. Hawaii's strategic location to support warfare in the Philippines made it especially important to American interests.

On 4 July 1898 Congress passed the Newlands Resolution (named after Congressman Francis Newlands) which officially annexed Hawaii to the United States.[7] The resolution was signed by McKinley on 7 July.[7] A formal ceremony was held on the steps of ʻIolani Palace where the Hawaiian flag was lowered and the American flag raised on 12 August. Dole was appointed Hawaii's first territorial governor.

Sanford B. Dole was sworn in as the first territorial governor on the steps of ʻIolani Palace as American businessmen and plantation owners lauded victory against the monarchy.

The Newlands Resolution said, "Whereas, the Government of the Republic of Hawaii having, in due form, signified its consent, in the manner provided by its constitution, to cede absolutely and without reserve to the United States of America, all rights of sovereignty of whatsoever kind in and over the Hawaiian Islands and their dependencies, and also to cede and transfer to the United States, the absolute fee and ownership of all public, Government, or Crown lands, public buildings or edifices, ports, harbors, military equipment, and all other public property of every kind and description belonging to the Government of the Hawaiian Islands, together with every right and appurtenance thereunto appertaining: Therefore, Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That said cession is accepted, ratified, and confirmed, and that the said Hawaiian Islands and their dependencies be, and they are hereby, annexed as a part of the territory of the United States and are subject to the sovereign dominion thereof, and that all and singular the property and rights hereinbefore mentioned are vested in the United States of America."[7]

The Newlands Resolution established a five-member commission to study which laws were needed in Hawaii. The commission included: Territorial Governor Sanford B. Dole (R-Hawaii Territory), Senators Shelby M. Cullom (R-IL) and John T. Morgan (D-AL), Representative Robert R. Hitt (R-IL) and former Hawaii Chief Justice and later Territorial Governor Walter F. Frear (R-Hawaii Territory). The commission's final report was submitted to Congress for a debate which lasted over a year. Congress raised objections that establishing an elected territorial government in Hawaii would lead to the admission of a state with a non-white majority.

Congress finally agreed to grant Hawaii a popularly elected government of its own and McKinley signed a law, An Act to Provide a Government for the Territory of Hawaii, also known as the Hawaiian Organic Act of 1900.

The Organic Act established the Office of the Territorial Governor, an office appointed by the sitting American president and was usually from his own political party. The territorial governor served at the pleasure of the president and could be replaced at any time.

Hawaii's tourism industry began in 1882 when Matson Navigation Company, founded by William Matson, began sailing vessels between San Francisco and Hawaii carrying goods. His transports encouraged him to purchase passenger steamships that would carry tourists hoping to vacation in Hawaii from the mainland United States.

Matson Navigation Company opened two resort hotels in Honolulu near royal grounds. The first (and for a time the only) hotel on Waikīkī was the Moana Hotel which opened in 1901. As the first hotel in Waikīkī, the Moana Hotel was nicknamed the "First Lady of Waikīkī." The hotel gained international attention in 1920 when Edward, Prince of Wales and future King Edward VIII of the United Kingdom, stayed as a guest.

In 1927, the Royal Hawaiian Hotel, informally called the "Pink Palace of the Pacific," opened for business. It was the preferred Hawaii residence of U.S. President Franklin D. Roosevelt during World War II.

With annexation, the United States saw Hawaii as its most strategic military asset. McKinley and his successor U.S. President Theodore Roosevelt expanded the military presence in Hawaii and established several key bases, some still in use today. By 1906, the entire island of Oahu was being fortified at the coastlines with the construction of a "Ring of Steel," a series of gunbatteries mounted on steel coastal walls. One of the few surviving batteries completed in 1911, Battery Randolph, is today the site of the U.S. Army Museum of Hawaii.

The Big Five corporations together became a single dominating force in Hawaii. The companies did not compete with each other but rather cooperated to keep the prices on their goods and services—and their profits—high. Soon, the executives of the Big Five sat on each others' boards of directors. With economic power came political power over Hawaii. They often threatened the labor force to vote in their favor. Plantation managers hung pencils over voting booths. The way the pencil swayed indicated how the laborer voted. Retaliation for voting "the wrong way" was common.[citation needed]

The territory became an oligarchy governed by the Big Five. They backed only whites and Republicans to run the government. During the rule of the Big Five, it was almost impossible to win an election in Hawaii as a Democrat.[citation needed]

James Dole, also known as the Pineapple King, arrived in Hawaii in 1899. He purchased land in Wahiawā and established the first pineappleplantation in Hawaii. Believing that pineapples could become a popular food substance outside of Hawaii, Dole built a cannery near his first plantation in 1901. HawaiianPineapple Company, later renamed Dole Food Company, was born.

With his business climbing in profits, Dole expanded and built a larger cannery in Iwilei near Honolulu Harbor in 1907. The Iwilei location made his main operations more accessible to labor. The cannery at Iwilei was in operation until 1991. Actress and performer Bette Midler was one of its most famous employees.

Dole found himself in the midst of an economic boom industry. In response to growing pineapple demand in 1922, Dole purchased the entire island of Lanai and transformed the desert landscape into the largest pineapple plantation in the world. For a long stretch of time, Lanai would produce 75% of the world's pineapple and become immortalized as the "Pineapple Island."

By the 1930s, Hawaii became the pineapple capital of the world and pineapple production became its second largest industry. After World War II, there were a total of eight pineapple companies in Hawaii.

One of the most prominent challenges territorial Hawaii had to face was race relations. By the time Hawaii became a territory, much of Hawaii's population was made up of plantation workers from China, Japan, the Philippines and Portugal. There was a substantially large native Hawaiian population that also shared in the work. Their plantation experiences molded Hawaii to become a plantation culture. The Hawaiian Pidgin language was developed on the plantations so they all could understand each other. Buddhism and Shintoism grew to become some of Hawaii's largest religions. Catholicism became Hawaii's largest Christian denomination.

Race relations in Hawaii took to the national spotlight on September 12, 1931 when Thalia Massie, a United States Navy officer's wife, got drunk and alleged that she was beaten and raped. That same night, the Honolulu Police Department stopped a car and detained five men, all plantation workers. Officers took the men to Massie's hospital bedroom where she identified them. Many analysts today say she was mistaken, and she accused them because of their ethnicity. Although evidence could not prove that the men were directly involved, national newspapers quickly ran stories about the brute locals on the prowl for white women in Hawaii. The jury in the initial trial failed to reach a verdict. One of the accused was afterwards severely beaten, while another, Joseph Kahahawai, was forced into a car and shot dead.

Police caught the Kahahawai killers: Massie's husband Thomas, mother Grace Fortescue, and two sailors. Famed criminal lawyer Clarence Darrow defended them. A jury of locals found them guilty and sentenced to hard labor for ten years. Outraged by the court's punishment, the territory's white leaders as well as 103 members of Congress signed a letter threatening to impose martial law over the territory. This pressured Governor Lawrence M. Judd to commute the sentences to an hour each in his executive chambers. Hawaii residents were shocked and all of America reconsidered what they thought of Hawaii's racial diversity.

In 1935 and 1937, Congress began deliberation over whether or not Hawaii should be granted statehood.[citation needed]Southernwhite supremacist politicians were outraged at the notion that Congress would allow for a non-white majority territory to be afforded the rights given to Americans on the mainland.[citation needed] Statehood was postponed for more than 20 years over the question of race.[citation needed]

From 1941 to 1944, following the attack on Pearl Harbor and America's entry into World War II, Territorial Governors Joseph B. Pointdexter and Ingram M. Stainback stripped themselves of their administrative powers by declaring martial law.[8] With the territorial constitution suspended, the legislature and supreme court were also dissolved indefinitely. Military law was enforced on all residents of Hawaii. The formation of the military government was mostly done by Maj. Gen. Thomas H. Green of the U.S Army Judge Advocate General's Corps, who became Military Attorney General. General Walter Short appointed himself military governor December 7, 1941. He assumed control of Hawaii and governed from ʻIolani Palace, which was quickly barricaded and fitted with trenches. He was relieved December 17 and charged with dereliction of duty, accused of making poor preparations in case of attack before the attack on Pearl Harbor.

Under martial law, every facet of Hawaiian life was under the control of the military governor. His government fingerprinted all residents over the age of six, imposed blackouts and curfews, rationed food and gasoline, censored the news and media, censored all mail, prohibited alcohol, assigned business hours, and administered traffic and special garbage collection. The military governor's laws were called General Orders. Violations meant punishment without appeal by military tribunals.

Anthony, the shadow Attorney General of the period, provides different information. The "aged and weak"[9] Poindexter (sic), an appointed Democrat, was variously misled into surrendering his powers. Anthony does not mention fingerprinting; corroborates gasoline rationing but not food (the latter unlike the mainland); and disproves a liquor ban by showing how the military gained handsome profits by liquor permits and fees.

The military government instituted employment stasis by General Order No. 91 (no leaving an employer without a letter of good standing); and the banning of courts that required witnesses and juries. Traffic violations were said to have netted prison terms[10] and the military courts evidenced bias against civilians. There ensued a turf battle between the federal Departments of War, Justice and Interior, in which the middle one played a mediating or flip-flopping role. Indeed, it appeared War if not the Pacific Command was operating autonomously.[11]

The Glockner and Seifert cases, actually two detained, naturalized Germans, tested the military's suspension of habeas corpus. In the second year of martial law, August 1943, U.S. District Judge Metzger subpoenaed General Richardson as to why these two were held without charges. The General, according to General Order No. 31, could have had the server arrested for bringing charges against a military person, but instead had the Marshal manhandled so as to evade summons.[12] The prisoners were released outside of Hawaii, avoiding the implicated fall of military power.

During the years leading up to the ousting the Republican Party Cold War fears brewed and the U.S. was in the middle of the Second Red Scare. The FBI employed the Smith Act toward the ILWU and Communist Party of Hawaii, arresting those who would become known as the Hawaii 7 on August 28, 1951 in synchronized raids at 6:30 that morning. They were convicted in a two-year-long trial. The Hawaii 7 were eventually released in 1958.[13][14]

After failing in 1935 and 1937 to convince Congress Hawaii was ready for statehood, Hawaii resurrected the campaign in 1940 by placing the statehood question on the ballot. Two-thirds of the electorate in the territory voted in favor of joining the Union.[15] After World War II, the call for statehood was repeated with even larger support, even from some mainland states. The reasons for the support of statehood were clear:

Hawaii wanted the ability to elect its own governor

Hawaii wanted the ability to elect the president

Hawaii wanted an end to taxation without voting representation in Congress

Hawaii suffered the first blow of the war

Hawaii's non-white ethnic populations, especially the Japanese, proved their loyalty by having served on the European frontlines

Hawaii consisted of 90% United States citizens, most born within the U.S.

All islands voted at least 93% in favor of Admission acts. Ballot (inset) and referendum results for the Admission Act of 1959.

A former officer of the Honolulu Police Department, John A. Burns, was elected Hawaii's delegate to Congress in 1956.[16] A Democrat, Burns won without the white vote but rather with the overwhelming support of Japanese and Filipinos in Hawaii. His election proved pivotal to the statehood movement. Upon arriving in Washington, D.C., Burns began making key political maneuvers by winning over allies among Congressional leaders and state governors. Burns' most important accomplishment was convincing Senate Majority LeaderLyndon B. Johnson (D-Texas) that Hawaii was ready to become a state.

In March 1959, both houses of Congress passed the Hawaii Admission Act and U.S. President Dwight D. Eisenhower signed it into law. On June 27, 1959, a plebiscite was held asking Hawaii residents to vote on accepting the statehood bill. Hawaii voted 17 to 1 to accept.[17] On August 21, church bells throughout Honolulu were rung upon the proclamation that Hawaii was finally a US state.

^"Commemorating 50 Years of Statehood". archive.lingle.hawaii.gov. State of Hawaii. 2009-03-18. Retrieved 2014-03-21. On June 27, 1959, a plebiscite was held to allow Hawai`i residents to ratify the congressional vote for statehood. The 'yes for statehood' garnered 94.3 percent (132,773 votes) while the 'no' ballots totaled 5.7 percent (7,971 votes).